For the eight consecutive month and the 24th time in the last 25 months, economic activity in the manufacturing sector contracted according to the Manufacturing ISM Report On Business released on Dec. 2.
The Manufacturing PMI registered 48.4% in November, 1.9 percentage points higher compared to the 46.5% recorded in October.
The overall economy continued in expansion for the 55th month after one month of contraction in April 2020.
"U.S. manufacturing activity contracted again in November, but at a slower rate compared to last month,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, in a statement. ”Demand continues to be weak but may be moderating, output declined again, and inputs stayed accommodative.”
"Demand remains weak, as companies prepare plans for 2025 with the benefit of the election cycle ending,” Fiore added. “Production execution eased in November, consistent with demand sluggishness and weak backlogs. Suppliers continue to have capacity, with lead times improving but some product shortages reappearing.”
The index report is as follows:
- The Supplier Deliveries Index indicated faster deliveries, registering 48.7%, 3.3 percentage points lower than the 52% recorded in October.
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The Inventories Index registered 48.1%, up 5.5 percentage points compared to October's reading of 42.6 %.
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The New Orders Index returned to expansion, albeit weakly, after seven months of contraction, registering 50.4 %, 3.3 percentage points higher than the 47.1% recorded in October.
- The Production Index was at 46.8%, which is 0.6 percentage point higher than October's figure of 46.2%.
- The Prices Index continued in expansion, registering 50.3%, down 4.5 percentage points compared to the reading of 54.8% in October.
- The Backlog of Orders Index registered 41.8%, down 0.5 percentage point compared to the 42.3% recorded in October.
- The Employment Index registered 48.1%, up 3.7 percentage points from October's figure of 44.4%.
- The New Export Orders Index reading of 48.7% 3.2 percentage points higher than the 45.5% registered in October.
- The Imports Index remained in contraction territory in November, registering 47.6%, 0.7 percentage point lower than October's reading of 48.3%.
What Respondents Are Saying
- "High mortgage rates continue to hamper demand for new housing construction, which is a key market for adhesives and sealants." [Chemical Products]
- "Business remains slow. We anticipate that the first half of 2025 will be similar and hope that demand increases in the second half of 2025." [Transportation Equipment]
- "Inflation, even after easing, continues to impact demand. Consumers are looking for value, and purchasing behaviors are changing as many shoppers reduce consumption, causing softer volume." [Food, Beverage & Tobacco Products]
- "Backlog is rising precipitously after 18 months of troughing. The long-awaited pent-up buying has started. Competition for qualified technical labor is a constraint on operational throughput." [Computer & Electronic Products]
- "A general construction slowdown in the fourth quarter has created a surplus of finished goods, creating the need for an extra two weeks of shutdown over the Christmas holiday period. We are carefully watching demand in the first quarter to determine if more permanent workforce reductions will be necessary." [Machinery]
- "Business is slowing as customers destock and appear uncertain about near-term demand. Preliminary forecast for 2025 is down significantly; we hope to see improvements now that we are beyond U.S. election uncertainties." [Fabricated Metal Products]
- "Our supplier has a positive outlook on the U.S. economy going into 2025. Our business is seeing an uptick in sales forecasts for the first quarter of 2025 versus the fourth quarter of 2024. Overall, our outlook for 2025 is optimistic." [Textile Mills]
- "We're finally seeing traction in the last few weeks (with) a higher volume of orders. Backlog is starting to grow." [Electrical Equipment, Appliances & Components]
- "After the election, we have seen an uptick in customers wanting to come back to the U.S. for making their products. We are working through these inquiries. They seem very motivated." [Primary Metals]
